This topic was inspired by the stellar contributions/predictions of Dr. Jimoh Ibrahim (CFR), the Group Managing Director, Energy Group and other eminent Nigerian thinkers on the expectations in stock for the country and its citizens in 2015. Those who followed Dr. Ibrahim’s four-part essay on the subject up to last Saturday must have read things like: “It is expected that the economic damages of 2008 will now be fully cleared in 2017, with positive signals emerging from 2015”. He also says: “There will also be massive protests as the tension created by poor standard of living and the demand for right to life created by social awareness will be higher in 2015. This is in addition to religious protests and political pressures for free and fair elections”.
Dr. Ibrahim, in addition, predicted that state governments that borrowed funds from the capital market may not be able to pay salaries, as some of them have signed irrevocable letters of authority to the Accountant- General of the Federation, to pay their allocations to specific bank accounts from where the deductions of both the repayment and interest elements of their loans will be paid.
President, Lagos Chamber of Commerce and Industry (LCCI), Alhaji Remi Bello, for his part, says Nigeria may record slow economic growth this fiscal year because of prevailing economic indices. “Going by the way the budget is structured; it is the recurrent expenditure that grows while capital expenditure, which ought to have pushed development, is stunted. The result is that common commodities would be costly, thus leading to agitations by the labour force for increment in their salaries, while inflation looms.” Apparently working on this year’s very unrealistic budget, Bello says if the total recurrent expenditure of N3.97 trillion is removed from the aggregate budget expenditure of N4.358 trillion, capital expenditure will come down to a paltry N387 billion, a mere nine per cent of the total budget. Of course the capital expenditure faces even greater harm since the N4.358 trillion budget may still be scaled down to face the realities of falling international oil prices.
Some of the hopes the Federal Government has been raising are in the areas of improved electricity supply; Nigeria becoming a net exporter of rice in the next three years; opening up of rail transport; Nigeria Industrial Revolution Plan (NIRP); National Enterprise Development Plan (NEDP); and sundry others that have been added since the ban on political campaigns was lifted early January. But the recent indigenous contribution of Henry Boyo, one of the few Nigerians that sufficiently capture the Nigerian dilemma in one of the national dailies, will equally help in demystifying the nation’s economy this year. Boyo says: “Early in December 2014, the CBN Governor, Godwin Emefiele, unexpectedly reneged on his earlier assurances to maintain naira exchange rate at the five-year rate of about N155=$1. Consequently, the naira now trades at between N165 and N173 to the dollar at the official retail Dutch Auction window with CBN.
“However, these ‘premium’ rates seem only applicable (to) government transactions… the CBN (for example) would substitute a minimum of N165 for every $1 of distributable dollar denominated revenue, before sharing to the three tiers of government, a process that incidentally, instigates the poisonous economic burden of excess liquidity! There are already allegations by manufacturers that their forex bid for importation of raw materials/inputs were directed to the interbank window, where the dollar currently exchanges for close to N190/$1, i.e. about 30 per cent more than what manufacturers paid for their dollar requirements barely a month ago! Regrettably, the current demand pressure may likely push the interbank Naira exchange rate above N200=$1, with disastrous consequences for the funds requirement of the real sector.
“Thus, a manufacturer who usually required N100 million for imported raw materials/inputs, will now require up to N130 million to buy the same inputs if the naira exchange rate approaches N200=$1. Worse still, the same manufacturer who barely survived the burden of borrowing N100m with 20 per cent interest rate, may, unfortunately, now need to borrow N130m, with possibly higher cost of funds to remain on the same spot. Meanwhile, the Nigerian manufacturer still carries the burden of providing his own power as well as provision of access roads, security and other extraneous expenditures to stay in business. It is a no-brainer that ultimately, Made-in-Nigerian products will certainly be more expensive than the imported, finished or intermediate equivalent”.
In politics, the Nigerian style, anything goes. But these truths or predictions, if unaddressed, will continue to haunt and hound all, particularly the government of the day, when the chips are down.
